The management of Zigby Manufacturing prepared the following balance sheet for March 31. Cash Accounts receivable Raw materials inventory Assets ZIGBY MANUFACTURING Balance Sheet March 31 Liabilities Accounts payable Liabilities and Equity $ 64,000 551,040 157,600 Loan payable Finished goods inventory 520,864 Long-term note payable $ 321,600 12,000 800,000 $ 1,133,600 Equipment Less: Accumulated depreciation $ 960,000 240,000 Equity 720,000 Common stock 536,000 Retained earnings 343,904 879,904 Total assets $ 2,013,504 Total liabilities and equity $ 2,013,504 To prepare a master budget for April, May, and June, management gathers the following information. a. Sales for March total 32,800 units. Budgeted sales in units follow: April, 32,800; May, 31,200; June, 32,000; and July, 32,800. The product's selling price is $24.00 per unit and its total product cost is $19.85 per unit. b. Raw materials inventory consists solely of direct materials that cost $20 per pound. Company policy calls for a given month's ending materials inventory to equal 50% of the next month's direct materials requirements. The March 31 raw materials inventory is 7,880 pounds. The budgeted June 30 ending raw materials inventory is 6,400 pounds. Each finished unit requires 0.50 pound of direct materials. c. Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's budgeted unit sales. The March 31 finished goods inventory is 26,240 units. d. Each finished unit requires 0.50 hour of direct labor at a rate of $15 per hour. e. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $32,000 per month is the only fixed factory overhead item. f. Sales commissions of 8% of sales are paid in the month of the sales. The sales manager's monthly salary is $4,800. g. Monthly general and administrative expenses include $19,200 for administrative salaries and 0.9% monthly interest on the long- term note payable. Homework i Saved Help The management of Zigby Manufacturing prepared the following balance sheet for March 31. Cash Accounts receivable Assets ZIGBY MANUFACTURING Balance Sheet March 31 Liabilities Accounts payable Liabilities and Equity $ 64,000 551,040 Raw materials inventory 157,600 Loan payable Finished goods inventory 520,864 Long-term note payable $ 321,600 12,000 800,000 $ 1,133,600 Equipment Less: Accumulated depreciation $ 960,000 240,000 Equity 720,000 Common stock 536,000 Retained earnings 343,904 879,904 Total assets $ 2,013,504 Total liabilities and equity $ 2,013,504 To prepare a master budget for April, May, and June, management gathers the following information. a. Sales for March total 32,800 units. Budgeted sales in units follow: April, 32,800; May, 31,200; June, 32,000; and July, 32,800. The product's selling price is $24.00 per unit and its total product cost is $19.85 per unit. b. Raw materials inventory consists solely of direct materials that cost $20 per pound. Company policy calls for a given month's ending materials inventory to equal 50% of the next month's direct materials requirements. The March 31 raw materials inventory is 7,880 pounds. The budgeted June 30 ending raw materials inventory is 6,400 pounds. Each finished unit requires 0.50 pound of direct materials. c. Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's budgeted unit sales. The March 31 finished goods inventory is 26,240 units. d. Each finished unit requires 0.50 hour of direct labor at a rate of $15 per hour. e. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $32,000 per month is the only fixed factory overhead item. f. Sales commissions of 8% of sales are paid in the month of the sales. The sales manager's monthly salary is $4,800. g. Monthly general and administrative expenses include $19,200 for administrative salaries and 0.9% monthly interest on the long- term note payable. Prev 1 of 1 Next